What Home Improvements Are Tax Deductible?

What Home Improvements Are Tax Deductible?

As a homeowner, it can be difficult to know which home improvements are worthwhile, much less how to fit them into your budget. One way to manage the cost is to take advantage of available tax breaks for certain upgrades. While not every home project is eligible to be deducted, you can often find at least one or two ways to save money on your renovation or remodel. Still, it can be tricky to navigate, especially for first-time homebuyers or those without any expertise or experience in preparing their own taxes. So if you’re planning on making any improvements or upgrades, keep reading to learn more about which home improvements may be tax-deductible.

How can you tell if your home needs improvement?

One of the best ways to be prepared for necessary repairs is by being proactive about home maintenance. Even a quick inspection of fixtures like your windows and doors can reveal cracks and crevices or give you insight into their relative condition. Many appliances and household systems can also have obvious red flags that indicate they may need help. Taking care of your home can be a good way to avoid expensive replacements and upgrades in the future.

Your HVAC system should always be a priority when it comes to maintenance and repair. There are several warning signs that your AC needs some help that you should look out for as a homeowner, including unexplained foul odors in your home, lack of temperature regulation, and the presence of excess moisture, mold, or other debris. A broken HVAC or one that isn’t operating at peak efficiency can have a negative impact on both your comfort and health, so you should have a technician take a look as soon as possible. 

What home improvements are tax deductible?

The primary factor determining tax deduction eligibility is whether the project is considered an improvement or a repair. Repairs are projects designed to restore the home to its initial valuation, whereas improvements add to the value of your home. Repairs include things like carpet cleaning, installing new windows, or replacing shingles on the roof. Adding a new roof entirely, installing a new plumbing system, or investing in new built-in appliances are all examples of improvements. However, some are only deductible in the tax year that the home is sold. But even a home office can have tax benefits. 

Since tax deduction details for home improvement and repair can be complicated, it’s wise to seek out a tax professional to advise you before you begin any large-scale home project. If you plan to deduct any home improvements on your taxes, it’s important to keep thorough records of all of your expenses. It’s a good idea to use tax return folders to categorize and sort all of your receipts and other documentation. If you have an accountant, make sure you provide them with copies of your receipts and updates on any investments they may need to be aware of when tax season rolls around.

One of your primary responsibilities as a homeowner is to keep your home in good working order and create a space where you feel happy and comfortable. This typically means addressing problems like appliance breakdowns in short order and investing in improving your home as much as you’re able to. It’s important to know that some, but not all, home projects may be tax-deductible. To determine whether you can deduct your home improvements on your taxes, it ultimately comes down to whether a project can be categorized as an improvement or as a repair. While it’s a good idea to take advantage of tax benefits available for home improvements you need, there are plenty of repairs worth investing in, regardless of whether you can deduct them from your taxes.


Danny White